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Share Name | Share Symbol | Market | Type |
---|---|---|---|
PubMatic Inc | NASDAQ:PUBM | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.33 | -1.53% | 21.22 | 21.00 | 21.62 | 21.47 | 21.04 | 21.25 | 210,989 | 01:00:00 |
“We delivered another quarter of outstanding results, with accelerated revenue growth of 20%, highlighting our strong customer relationships, our breadth of solutions and growth across all formats and channels,” said Rajeev Goel, co-founder and CEO at PubMatic. “The digital supply chain of the future we are building brings new opportunities that are best addressed on the sell-side of the ecosystem, which sits closest to the consumer. These opportunities, including the need for increased innovation and efficiency, changing privacy regulations, and an onslaught of new ad inventory from CTV and commerce media, require deep and specialized technology. Customers and partners like Instacart, Klarna, Roblox and GroupM are choosing to build their ad businesses on PubMatic technology. We've spent 17 years building differentiated solutions and we believe our competitive moat is widening while our logo list continues to grow.”
First Quarter 2024 Financial Highlights
The section titled “Non-GAAP Financial Measures” below describes our usage of non-GAAP financial measures. Reconciliations between historical GAAP and non-GAAP information are contained at the end of this press release following the accompanying financial data.
Business Highlights
Revenue growth across all formats and channels
Scaled access to premium inventory, audiences and data attracts increased buyer demand
2024 operating priorities include investments for growth and continued efficiency gains
“Continuing our momentum from Q4, in the first quarter, we accelerated revenue growth, while delivering strong margins and free cash flow. Excluding revenue from Yahoo’s owned and operated inventory, revenue grew an impressive 25% over last year. Monetized impressions continued to grow across all formats and channels as the need from publishers and ad buyers for our differentiated sell-side technology increases,” said Steve Pantelick, CFO at PubMatic. “We are making steady progress on our 2024 key operating priorities which include increasing investment for revenue growth acceleration, delivering cost efficiencies, and generating strong free cash flow. As a result, we are raising our full year guidance. At the midpoints, we expect year-over-year revenue growth to be 12%, and adjusted EBITDA margin to be approximately 31%.”
Financial Outlook
Our Q2 and full year outlook reflects a balance between our growth trajectory and an anticipated headwind as one of our top DSPs plans to revise its bidding approach. We anticipate offsetting this headwind as the year progresses with continued strong underlying growth across ad formats, channels, and regions, as well as emerging revenue streams. Further, our outlook assumes that general market conditions do not significantly deteriorate as it relates to current macroeconomic and geopolitical conditions.
Accordingly, we estimate the following:
For the second quarter of 2024, we expect the following:
For the full year 2024, we are raising revenue and adjusted EBITDA guidance and expect the following:
Although we provide guidance for adjusted EBITDA and free cash flow, we are not able to provide guidance for net income, the most directly comparable GAAP measure. Certain elements of the composition of GAAP net income, including stock-based compensation expenses, are not predictable, making it impractical for us to provide guidance on net income or to reconcile our adjusted EBITDA guidance to net income without unreasonable efforts. For the same reason, we are unable to address the probable significance of the unavailable information.
Conference Call and Webcast details
PubMatic will host a conference call to discuss its financial results on Tuesday, May 7, 2024 at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). A live webcast of the call can be accessed from PubMatic’s Investor Relations website at https://investors.pubmatic.com. An archived version of the webcast will be available from the same website after the call.
Non-GAAP Financial Measures
In addition to our results determined in accordance with U.S. generally accepted accounting principles (GAAP), including, in particular operating income, net cash provided by operating activities, and net income (loss), we believe that adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income, non-GAAP net income per diluted share and free cash flow, each a non-GAAP measure, are useful in evaluating our operating performance. We define adjusted EBITDA as net income (loss) adjusted for stock-based compensation expense, depreciation and amortization, unrealized gain, loss or impairment of equity investment, interest income, acquisition-related and other expenses, and provision for (benefit from) income taxes. Adjusted EBITDA margin represents adjusted EBITDA calculated as a percentage of revenue. We define non-GAAP net income as net income (loss) adjusted for unrealized (gain) loss on equity investments, stock-based compensation expense, acquisition-related and other expenses, and adjustments for income taxes. We define non-GAAP free cash flow as net cash provided by operating activities reduced by purchases of property and equipment and capitalized software development costs.
In addition to operating income and net income, we use adjusted EBITDA, non-GAAP net income, and free cash flow as measures of operational efficiency. We believe that these non-GAAP financial measures are useful to investors for period to period comparisons of our business and in understanding and evaluating our operating results for the following reasons:
Our use of non-GAAP financial measures has limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our financial results as reported under GAAP. Some of these limitations are as follows:
Because of these and other limitations, you should consider adjusted EBITDA, non-GAAP net income, and free cash flow along with other GAAP-based financial measures, including net income (loss) and cash flow from operating activities, and our GAAP financial results.
Forward Looking StatementsThis press release contains “forward-looking statements” regarding our future business expectations, including our guidance relating to our revenue and adjusted EBITDA for the second quarter of 2024 and revenue, adjusted EBITDA margin, free cash flow and capital expenditures for full year 2024, our expectations regarding our total addressable market, future market growth, and our ability to gain market share. These forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions and may differ materially from actual results due to a variety of factors including: our dependency on the overall demand for advertising and the channels we rely on; our existing customers not expanding their usage of our platform, or our failure to attract new publishers and buyers; our ability to maintain and expand access to spend from buyers and valuable ad impressions from publishers; the rejection of the use of digital advertising by consumers through opt-in, opt-out or ad-blocking technologies or other means; our failure to innovate and develop new solutions that are adopted by publishers; the war between Ukraine and Russia and the ongoing conflict between Israel and Palestine, and the related measures taken in response by the global community; the impacts of inflation as well as fiscal tightening and rising interest rates; public health crises, including the resulting global economic uncertainty; limitations imposed on our collection, use or disclosure of data about advertisements; the lack of similar or better alternatives to the use of third-party cookies, mobile device IDs or other tracking technologies if such uses are restricted; any failure to scale our platform infrastructure to support anticipated growth and transaction volume; liabilities or fines due to publishers, buyers, and data providers not obtaining consents from consumers for us to process their personal data; any failure to comply with laws and regulations related to data privacy, data protection, information security, and consumer protection; and our ability to manage our growth. Moreover, we operate in a competitive and rapidly changing market, and new risks may emerge from time to time. For more information about risks and uncertainties associated with our business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of our SEC filings, including but not limited to, our annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which are available on our investor relations website at https://investors.pubmatic.com and on the SEC website at www.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024. All information in this press release is as of May 7, 2024. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
About PubMatic
PubMatic is an independent technology company maximizing customer value by delivering digital advertising’s supply chain of the future. PubMatic’s sell-side platform empowers the world’s leading digital content creators across the open internet to control access to their inventory and increase monetization by enabling marketers to drive return on investment and reach addressable audiences across ad formats and devices. Since 2006, PubMatic’s infrastructure-driven approach has allowed for the efficient processing and utilization of data in real time. By delivering scalable and flexible programmatic innovation, PubMatic improves outcomes for its customers while championing a vibrant and transparent digital advertising supply chain.
CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)(unaudited) | |||||||
March 31,2024 | December 31,2023 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 80,194 | $ | 78,509 | |||
Marketable securities | 93,887 | 96,835 | |||||
Accounts receivable, net | 303,284 | 375,468 | |||||
Prepaid expenses and other current assets | 11,540 | 11,143 | |||||
Total current assets | 488,905 | 561,955 | |||||
Property, equipment and software, net | 56,550 | 60,729 | |||||
Operating lease right-of-use assets | 23,473 | 21,102 | |||||
Acquisition-related intangible assets, net | 5,469 | 5,864 | |||||
Goodwill | 29,577 | 29,577 | |||||
Deferred tax assets | 18,547 | 13,880 | |||||
Other assets, non-current | 3,669 | 2,136 | |||||
TOTAL ASSETS | $ | 626,190 | $ | 695,243 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities | |||||||
Accounts payable | $ | 289,176 | $ | 347,673 | |||
Accrued liabilities | 19,763 | 25,684 | |||||
Operating lease liabilities, current | 6,841 | 6,236 | |||||
Total current liabilities | 315,780 | 379,593 | |||||
Operating lease liabilities, non-current | 17,613 | 15,607 | |||||
Other liabilities, non-current | 4,067 | 3,844 | |||||
TOTAL LIABILITIES | 337,460 | 399,044 | |||||
Stockholders' equity | |||||||
Common stock | 6 | 6 | |||||
Treasury stock | (86,857 | ) | (71,103 | ) | |||
Additional paid-in capital | 241,179 | 230,419 | |||||
Accumulated other comprehensive loss | (25 | ) | (4 | ) | |||
Retained earnings | 134,427 | 136,881 | |||||
TOTAL STOCKHOLDERS’ EQUITY | 288,730 | 296,199 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 626,190 | $ | 695,243 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data)(unaudited) | |||||||
Three Months Ended March 31, | |||||||
2024 | 2023 | ||||||
Revenue | $ | 66,701 | $ | 55,407 | |||
Cost of revenue(1) | 25,424 | 23,863 | |||||
Gross profit | 41,277 | 31,544 | |||||
Operating expenses:(1) | |||||||
Technology and development | 7,960 | 6,517 | |||||
Sales and marketing | 24,815 | 23,127 | |||||
General and administrative | 14,027 | 12,572 | |||||
Total operating expenses | 46,802 | 42,216 | |||||
Operating loss | (5,525 | ) | (10,672 | ) | |||
Interest income | 2,564 | 1,891 | |||||
Other income (expense), net | 258 | (465 | ) | ||||
Loss before income taxes | (2,703 | ) | (9,246 | ) | |||
Benefit from income taxes | (249 | ) | (3,375 | ) | |||
Net loss | $ | (2,454 | ) | $ | (5,871 | ) | |
Basic and diluted net loss per share of Class A and Class B stock | $ | (0.05 | ) | $ | (0.11 | ) | |
Weighted-average shares used to compute net loss per share attributable to common stockholders: | |||||||
Basic and diluted | 50,039 | 52,740 |
(1)Stock-based compensation expense includes the following:
STOCK-BASED COMPENSATION EXPENSE(In thousands)(unaudited) | |||||
Three Months Ended March 31, | |||||
2024 | 2023 | ||||
Cost of revenue | $ | 437 | $ | 316 | |
Technology and development | 1,441 | 1,008 | |||
Sales and marketing | 3,238 | 2,709 | |||
General and administrative | 3,995 | 3,026 | |||
Total stock-based compensation expense | $ | 9,111 | $ | 7,059 |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS(In thousands)(unaudited) | |||||||
Three Months Ended March 31, | |||||||
2024 | 2023 | ||||||
CASH FLOW FROM OPERATING ACTIVITIES: | |||||||
Net loss | $ | (2,454 | ) | $ | (5,871 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation and amortization | 11,212 | 11,432 | |||||
Stock-based compensation | 9,111 | 7,059 | |||||
Deferred income taxes | (4,667 | ) | (4,327 | ) | |||
Accretion of discount on marketable securities | (1,234 | ) | (1,057 | ) | |||
Non-cash operating lease expense | 1,690 | 1,532 | |||||
Other | (1 | ) | (3 | ) | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 72,184 | 61,292 | |||||
Prepaid expenses and other assets | (196 | ) | 894 | ||||
Accounts payable | (58,444 | ) | (55,387 | ) | |||
Accrued liabilities | (1,784 | ) | (833 | ) | |||
Operating lease liabilities | (1,380 | ) | (1,265 | ) | |||
Other liabilities, non-current | 257 | (712 | ) | ||||
Net cash provided by operating activities | 24,294 | 12,754 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchases of property and equipment | (801 | ) | (1,417 | ) | |||
Capitalized software development costs | (7,231 | ) | (6,001 | ) | |||
Purchases of marketable securities | (34,336 | ) | (40,343 | ) | |||
Proceeds from maturities of marketable securities | 38,500 | 29,500 | |||||
Net cash used in investing activities | (3,868 | ) | (18,261 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Payment of business combination indemnification claims holdback | (2,148 | ) | — | ||||
Proceeds from exercise of stock options | 939 | 314 | |||||
Principal payments on finance lease obligations | (32 | ) | (31 | ) | |||
Payments to acquire treasury stock | (17,500 | ) | (7,898 | ) | |||
Net cash used in financing activities | (18,741 | ) | (7,615 | ) | |||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 1,685 | (13,122 | ) | ||||
CASH AND CASH EQUIVALENTS - Beginning of period | 78,509 | 92,382 | |||||
CASH AND CASH EQUIVALENTS - End of period | $ | 80,194 | $ | 79,260 |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES(In thousands, except per share amounts)(unaudited) | |||||||
Three Months Ended March 31, | |||||||
2024 | 2023 | ||||||
Reconciliation of net loss: | |||||||
Net loss | $ | (2,454 | ) | $ | (5,871 | ) | |
Add back (deduct): | |||||||
Stock-based compensation | 9,111 | 7,059 | |||||
Depreciation and amortization | 11,212 | 11,432 | |||||
Interest income | (2,564 | ) | (1,891 | ) | |||
Acquisition-related and other expenses3 | — | — | |||||
Benefit from income taxes | (249 | ) | (3,375 | ) | |||
Adjusted EBITDA | $ | 15,056 | $ | 7,354 | |||
Revenue | $ | 66,701 | $ | 55,407 | |||
Adjusted EBITDA margin | 23 | % | 13 | % |
Three Months Ended March 31, | |||||||
2024 | 2023 | ||||||
Reconciliation of net loss per share: | |||||||
Net loss | $ | (2,454 | ) | $ | (5,871 | ) | |
Add back (deduct): | |||||||
Stock-based compensation | 9,111 | 7,059 | |||||
Acquisition-related and other expenses1 | — | — | |||||
Adjustment for income taxes | (1,886 | ) | (1,318 | ) | |||
Non-GAAP net income (loss) | $ | 4,771 | $ | (130 | ) | ||
GAAP diluted EPS | $ | (0.05 | ) | $ | (0.11 | ) | |
Non-GAAP diluted EPS | $ | 0.09 | $ | 0.00 | |||
GAAP weighted average shares outstanding—diluted | 50,039 | 52,740 | |||||
Non-GAAP weighted average shares outstanding—diluted | 55,006 | 52,740 | |||||
Reported GAAP diluted loss per share for the three months ended March 31, 2024 and 2023 were calculated using basic share count. Non-GAAP diluted earnings per share for the three months ended March 31, 2024 was calculated using diluted share count which includes approximately 5 million shares of dilutive securities related to employee stock awards.
Three Months Ended March 31, | |||||||
2024 | 2023 | ||||||
Reconciliation of cash provided by operating activities: | |||||||
Net cash provided by operating activities | $ | 24,294 | $ | 12,754 | |||
Less: Purchases of property and equipment | (801 | ) | (1,417 | ) | |||
Less: Capitalized software development costs | (7,231 | ) | (6,001 | ) | |||
Free cash flow | $ | 16,262 | $ | 5,336 |
1 Net dollar-based retention is calculated by starting with the revenue from publishers in the trailing twelve months ended March 31, 2023 (Prior Period Revenue). We then calculate the revenue from these same publishers in the trailing twelve months ended March 31, 2024 (Current Period Revenue). Current Period Revenue includes any upsells and is net of contraction or attrition, but excludes revenue from new publishers. Our net dollar-based retention rate equals the Current Period Revenue divided by Prior Period Revenue. Net dollar-based retention rate is an important indicator of publisher satisfaction and usage of our platform, as well as potential revenue for future periods2 Omnichannel video spans across desktop, mobile and CTV devices.3 Beginning in the third quarter of fiscal 2023, we no longer exclude the impact of post-acquisition cash compensation agreements for certain key acquired employees from the Martin acquisition from Adjusted EBITDA and Non-GAAP net income. Prior period amounts for Adjusted EBITDA and Non-GAAP net income have been updated to conform to the current period presentation. For comparative purposes, the impact of this change to our adjusted EBITDA and Non-GAAP net income (loss) for the three months ended March 31, 2023 is a decrease to Adjusted EBITDA income and Non-GAAP net income of $1.0 million.
Investors: The Blueshirt Group for PubMatic investors@pubmatic.com Press Contact: Broadsheet Communications for PubMatic pubmaticteam@broadsheetcomms.com
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